This assessment is based on a tourism business located in Akaroa, Banks Peninsula. You are required to write a business report that presents primary and secondary research on the four business functions. The findings will be analysed so that you can present conclusions and recommendations that will support efficiency and effectiveness in the business.
John and Mary Wheeler observed an opportunity in Akaroa, owing to their visit to the Waitangi Marae. The couple had visited a light and sound show in the place which was based on the historical background of Waitangi. They found it interesting and enlightening as tourists wants to know about the historical background of a place that has a culture of its own. The summer cruise had established a stop at the banks of the Akaroa Peninsular which would draw a considerable amount of audience to the show. The region is famous for its Maori and French history and thus the production was decided to be based on this aspect of the culture. A partnership was setup by John and Mary along with the NASDA staff and students. This partnership was called Akaroa Experience Partnership and the students and staffs were responsible for scripting and writing the songs etc. The company hired the students as the cast as well as to maintain the backstage maintenance.
In the summer of 2012-2013, the company had seen a slow but steady growth of the business, as 10 percent of the cruise guests were attracted and were a major part of the audience. In three years the organisation grew and gathered considerable attention from the promotions and marketing form the cruise. After reaching a stabilized place in the market the owners of the organisation appointed a manager to look over the business full time. This decision was also taken as the owners wanted to concentrate on the previous event management business. For a considerable period of time the company was facing a growth in the business but during 2017-2018, the company started facing difficulties in the business. The owners of the company were not sure why this downfall in revenue was taking place, thus they have asked to prepare a report on four business functions of the company and based the research on both secondary as well as primary resources.
The purpose of the assignment is to identify the cause of the revenue downfall of the The Akaroa Experience Show as most of the factors associated with the business seemed unchanged apart from the additional cost of the manager. The report was request by the end of March 2018 and it is due by the end of June 2018.
Both primary and secondary data collection methods will be used in the assignment in order to get a holistic perspective of the reason for the downfall of the company. The researcher will use the company financial records and documents as a part of the secondary research and an interview of the manager and the other people associated with the company will be conducted in order to understand the insights of the company.
Information gathered from secondary data collection
Following are the facts that are gathered from the secondary data collection:
Financial Statements: these are the records of the company that portray the success or failure of the achievement of the objectives (De Franco et al., 2011). The financial records showcase the elements of the company and the amount of investment that has been incorporated. The income statement shows the difference in the previous and the current financial status of the company (Chen et al., 2018). Along with the income statement the balance sheet is also a part of the final accounts that a company prepares at the end of a financial year. By comparing the two financial accounts of the previous and the current year the esuriency area can be recognized (Kim et al. 2016). There is an increase in the COGS in 2017-2018 which has reduced the gross profit further to $221,700, as there was already less sale. It has been observed that there has been a staggering fall in the net profit in 2017-2018, the sales of the company has reduced by 12.5 percent whereas several expenses like the marketing, administration and interest expenses were observed to be higher than the previous year. In the further breakdown of the expenses that is presented in the income statement it has been observed that the food expense in the COGS is the factor that has increased by $28,800 than the previous year. Therefore it can be said that the strategic management of the company has not been effective as the expenses are significantly higher than the ones in the previous year, the company have to strategies the marketing plan according to a budget and effectiveness of the reach to the target market. There is a complete lack of strategic management in the business process; there is lack of planning and budgeting which can be a cause of the low revenue for the year. Furthermore on studying the balance sheet of the company it has been observed that the amount of total assets of the company has declined by $93,160. The term deposits has not been included or added to the asset of the company in 2017-18.
Operations Management: Operations management is the function of the business which is responsible for preparing the product or services of the company (Jacobs et al., 2014). The operations of a business of the “Akaroa Experience Show” not only involve the process of performing but also involve the procedure which leads to the performance. Operations management is associated with the planning, organizing and supervising of the business function. Form the operations management metrics it can be observed that the number of tickets sold during 2017-2018 is lower than the previous year. The manager of the show is supposed to look after the operations of the business as it is a small scale operation, the dynamics of the target market has not changed but the tickets sale has dropped despite of heavy investment in marketing indicates towards a lack of effective management (Ates et al., 2013).
Sales and Marketing: Sales of the company is directly responsible of the revenue that the company has earned in a particular financial year (Verbano & Venturini, 2013). In this case the company revolves around selling the tickets of the show to the target market (Ahmed & Rahman, 2015). The service of the company is the show that is organized and the tickets are sold to the cruise guests and therefore the marketing strategies implemented during the initial process was encompassing the target market (Khan, 2014). When the sale of the ticket had started gaining popularity among the guests of the cruise ship, the company pitched the show to the cruise company so that they could take pre-bookings for the show and as a commission $3 was agreed upon each ticket. The students would also publicize the show on the streets by performing to sell extra tickets. However by studying the financial reports it has been indicated that the amount that is invested in the Marketing of the show has increased from the previous years. The metrics indicate that there is a significant rise in the complaints per 100 tickets sold. In the previous year the complaint recorded was around 0.5 and by the end of 2017-18 this metric has risen to 3. Thus, it can be concluded that the quality control of the show was not being monitored or evaluated to the full strength (Taiminen & Karjaluoto, 2015). The marketing strategy of the company should focus on the Product or service aspect of the marketing mix in order to fix the issues in the quality (Ahmed & Rahman, 2015).
Human Resources: Human resources are the backbone of the company as they are the ones who are responsible for efficiently performing the business functions. As is discussed in the case study the company does not have a human resource department, the students who are associated with the show and are the ones who are responsible for the outcome of the show (Sheehan, 2014). John and Mary Wheeler were associated with the operations of the company until they thought it was important for them to focus on their event management business and appointed a full time Manager to look after the business. But it has been observed in the records provided that the amount of absenteeism has increased and so has the employee turnover rate has also significantly risen. Employee turnover is the rate at which people join and leave the organisation, high rate of turn over indicate that more and more people are leaving the company (Saridakis et al., 2013). This is a major issue and can be one of the direct reasons for the fall of the quality of the show, which has further led to the fall in the sales revenue that has been discussed above.
Results from the primary research
The results of the primary research indicate some of the reasons for the rise in the cost as well as in the overall revenue.
Financial Statements
Per person fee that was charged by Onuku Marae was increased to $8 in 2017-18 which is $3 per person rise.
Similarly the marketing expense was increased sue to the rise in the commission of the cruise company $3 to $4.
On the other hand the manager also increased the ticket fee to accommodate the expenses from $30 to $35.
Operations Management
Cost of the labor per hour was reduced due to the decision taken by the manager to cover the hike in the marketing and promotion cost.
There was also another issue in the operations; the guests did not have any idea where to buy the tickets from and where the buses were that would take guests to the show.
Sales and Marketing
There has also been a lag in the payment deposit by the cruise company.
The marketing mix of the organisation is one of the major barriers as it is not planned and strategized based on logical reasoning, the fact that the website do not have a booking option is an issue. The feedbacks form the guests have not been used by the company to improve the performance hence this explains the increase in the number of complaints that has been discussed above.
The company has been observed to have received negative reviews on the performance on some of the influential platforms like Trip Advisor. This has led to the reduced demand of the performance among the cruise guests.
Change of the promotion strategy cost around $10,000. This has been good only for the local tourists as the banners are reaching out to them.
Human Resources
Reduced incentive for the cast members as the manager decided to promote the show with the help of banners instead of the cast members performing to attract the people.
Furthermore, the cast members were being paid less per hour on the days of the show as well; there was also a decrease in their commission.
The cast members were not happy with the managers’ decisions as the street performance was a part of their involvement with the show.
Conclusions
It can be concluded from the above discussion that the decision of John and Mary Wheeler to completely leave the company on someone new was wrong. As the dynamics of the external business environment changed the decisions that the manager took did not work out for the company. The rise in the commission of the place and the cruise company can be accommodated with the rise in price of the ticket. The marketing decision change was wrong as it did not attract enough people and it also cost the company its cast as well as tickets as the quality of the performance kept on reducing as the people were de motivated with the reduction in their wages. The performance of the human resource are directly associated with the performance of the company. Thus the company received negative feedbacks on their performance of the show. The rise in the cost and the fall in the tickets sale are the reasons of the poor performance of the company, the lack of strategic management and leadership in the company has led to the downfall of the venture.
The company requires strategic management decisions in order to deal with the changing dynamics of the external business environment.
The owners should assist the manager in taking the decisions as they understand the business better
The marketing decision has to revised
The company should attract the cast members so that they are motivated and their performance is consistent throughout
Reference list:
Ahmed, S., & Rahman, M. (2015). The effects of marketing mix on consumer satisfaction: A literature review from Islamic perspective.
Ates, A., Garengo, P., Cocca, P., & Bititci, U. (2013). The development of SME managerial practice for effective performance management. Journal of Small Business and Enterprise Development, 20(1), 28-54.
Chen, C. W., Collins, D. W., Kravet, T. D., & Mergenthaler, R. D. (2018). Financial statement comparability and the efficiency of acquisition decisions. Contemporary Accounting Research, 35(1), 164-202.
De Franco, G., Kothari, S. P., & Verdi, R. S. (2011). The benefits of financial statement comparability. Journal of Accounting Research, 49(4), 895-931.
Jacobs, F. R., Chase, R. B., & Lummus, R. R. (2014). Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Khan, M. T. (2014). The concept of’marketing mix’and its elements (a conceptual review paper). International journal of information, business and management, 6(2), 95.
Kim, J. B., Li, L., Lu, L. Y., & Yu, Y. (2016). Financial statement comparability and expected crash risk. Journal of Accounting and Economics, 61(2-3), 294-312.
Saridakis, G., Muñoz Torres, R., & Johnstone, S. (2013). Do human resource practices enhance organizational commitment in SMEs with low employee satisfaction?. British Journal of Management, 24(3), 445-458.
Sheehan, M. (2014). Human resource management and performance: Evidence from small and medium-sized firms. International Small Business Journal, 32(5), 545-570.
Taiminen, H. M., & Karjaluoto, H. (2015). The usage of digital marketing channels in SMEs. Journal of Small Business and Enterprise Development, 22(4), 633-651.
Verbano, C., & Venturini, K. (2013). Managing risks in SMEs: A literature review and research agenda. Journal of technology management & innovation, 8(3), 186-197
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